Saudi Arabia

"Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations."

As usual, in 2013, sticking to facts was a mistake in a world fueled by misinformation, propaganda, delusion and wishful thinking. Those in power have successfully held off the unavoidable collapse which will be brought about by their ravenous unbridled greed, and blatant disregard for the rule of law, the U.S. Constitution and rights and liberties of the American people.

"There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.”

The fifth anniversary of Zero Hedge is just around the corner, and so, for the fifth year in a row we continue our tradition of summarizing what you, our readers, found to be the most relevant, exciting, and actionable news of the year, determined objectively by the number of page views. Those eager for a brief stroll down memory lane of prior years can do so at their leisure, by going back in time to our top articles of 2009, 2010, 2011 and 2012. For everyone else, without further ado, these are the articles that readers found to be the most popular posts of the past 365 days...

That didn't take long. A day after Saudi Arabia pledged a record $3 billion to prop up Lebanon's armed forces, in what the WSJ described as "a challenge to the Iranian-allied Hezbollah militia's decadeslong status as Lebanon's main power broker and security force", Lebanese troops fired at Syrian warplanes for what is thought to be the first time since the conflict in Syria began. Quid pro quo.

Just barely hours after we covered the second deadly explosion in the southern Russian city of Volgograd in as many months, this time in its packed train station, the city was rocked by yet another suicide bombing in what is clearly a terrorist campaign to spook Russia and its Sochi winter games visitors just over a month ahead of the olympics.  This time, a bomb ripped apart a trolleybus killing all 14 people aboard, and wounding another 28 in the second deadly attack blamed on suicide bombers.  According to Reuters, "Investigators said they believed a male suicide bomber set off the blast, a day after a similar attack killed at least 17 in the main rail station of a city that serves as a gateway to the southern wedge of Russian territory bounded by the Black and Caspian Seas and the Caucasus mountains." Even Putin, so far non-committal, is starting to take these daily escalations seriously: "President Vladimir Putin, who has staked his prestige on February's Sochi Games and dismissed threats from Chechen and other Islamist militants in the nearby North Caucasus, ordered tighter security nationwide after the morning rush-hour blast."

• Americans on Wrong Side of Income Gap Run Out of Means to Cope (BBG)
• Michael Schumacher battles for life after ski fall (Reuters)
• Professors for hire: Academics Who Defend Wall St. Reap Reward (NYT)
• Chinese police kill eight in Xinjiang 'terrorist attack' (Reuters)
• How to Prevent a War Between China and Japan (BBG)
• Unemployment Benefits Lapse Severs Lifeline for Longtime Jobless (BBG)
• Japan's homeless recruited for murky Fukushima clean-up (Reuters)
• China Local-Government Debt Surges to $3 Trillion (WSJ)
• How unexpected: Britons less inclined to pay down mortgage debt (Reuters)

"According to the DOE data, for Bakken and Eagle Ford the legacy well decline rate has been running at either side of 6.5 per cent per month. When these fields were each producing 500,000 bpd that legacy decline therefore amounted to 33,000 bpd per month per field. With both fields now producing 1 million bpd the legacy decline is 65,000 bpd per month. Production from new wells has been running at about 90,000 bpd per month per field meaning net growth in production is 25,000 bpd per month. It will become smaller as output grows and that’s why ceteris paribus growth in output for both fields will continue to slow over the coming years."

"I can give you a guarantee to protect the Winter Olympics in the city of Sochi on the Black Sea next year. The Chechen groups that threaten the security of the games are controlled by us... " - Saudi Arabia's Bandar bin Sultan to Vladimir Putin, spoken in hope of Russia selling out the Syrian regime, summer 2013.

Sir Halford Mackinder’s 1904 speach in which he outlined his “Heartland Theory” was a founding moment for geo-politics. He argued that control of the Eurasian landmass (Europe, Asia and the Middle East), which contained the bulk of the world’s population and natural resources, was the major geo-political prize. As time passed, energy (first crude oil then natural gas), became increasingly integral to this concept and its strategic significance cannot be overstated. Remarkably, Mackinder’s theory has remained equally valid, if not more so, in the modern era - although key “pivot areas” for exercising control have evolved. In addition to Central Asia and Trans-Caucasus in Mackinder’s day, the oil producing nations of the Middle East took on increasing importance in the “New Great Game”. We see a “New New Great Game” emerging.

It was in October 2012 when we explained how Iran evades the Western blockade (ostensibly with the implicit nod of none other than the US), and when we first defined the concept of PetroGold in the context of the Turkey-Dubai-Iran crude-for-gold triangle. One year later, following Iran's unperturbed ability to exist in a world without US dollars, the blockade of Iran is a thing of the past, and the west has engaged in a full-blown detente with the country, much to the fury of both Israel and Saudi Arabia, lowering and in many cases outright eliminating Iran sanctions, which proved futile. So a happy ending for Iran (if only briefly). However, one country that has seen better days, whose government may be on the edge of collapse due to an unprecedented corruption scandal precisely for enabling said PetroGold scheme, and which has been in the news on a daily basis recently, is Turkey. As Turkey's Today's Zaman explains in "Iran's Turkish Gold Rush", the political crisis Turkey finds itself in may be nothing but a consequence of the PetroGold scheme conceived over a year ago, and in which Turkey played a crucial role.  Here is how the Turkey-Dubai-Iran PetroGold triangle, or as the Zaman calls it, "gas for gold", may soon result in the toppling of yet another government, simply because it showed that existence outside of the clutches of the 'Petrodollar' is perfectly possible...

In the "west", the higher the price of gold rose, the more demand there seemingly was by momentum-chasing gamblers investors, if only for paper certificates claiming to represent gold, or GLD as the case may be. Conversely, once the momentum turned, the same investors couldn't be bothered with gld (sic) even at 30% lower. At the same time, in the "east" the higher the price of gold rose, the lower the demand was for physical, which for that extinct breed of deranged gambler known as "value investor" is a familiar concept."  And now that gold's price is not only back to early 2011 levels, but is essentially below production costs, demand out of China is off the charts. Demand in India - traditionally the greatest in the world - continues to also at unprecedented levels, although now that official purchases of gold are regulated and limited through capital controls, it is forcing the local population to smuggle in gold through the most innovative of schemes.  But while the west is the west, and the east is the east, and no amount of adaptive behavioral modifications can change that, much to central bankers' chagrin, what lies in-between? Courtesy of the Saudi Gazette we learn that the uber-rich middle eastern kingdom, which floats on a sea of oil has picked its side... and it has chosen to take advantage of the ongoing paper-driven price collapse and load up on as much gold as possible.

While a military campaign against Syria (and Iran) on the usual grounds has been postponed indefinitely, two nations in the Middle East have been seething: Saudi Arabia and, of course, Israel. Yet while Saudi Arabia rarely if ever gets its own hands dirty, instead executing its geopolitcal strategy through puppet states in need of its oil, Israel has never had a problem with engaging in offensive wars. And now that the threat of an imminent war, one which would have been largely carried out on the back of the US military, is gone Israel is preparing to do just that. According to UPI, "Israeli generals are preparing for a decisive -- and probably brief -- war against Hezbollah, one of Israel's most implacable foes, with plans to smash the Iranian-backed Lebanese movement's military power, a study says. The Israelis' primary objective will be to eradicate Hezbollah's reputedly massive arsenal of missiles and rockets "for years to come," the report by the Begin-Sadat Center for Strategic Studies in Tel Aviv said."

• China cash injection fails to calm lenders (AFP)
• European Union Stripped of AAA Credit Rating at S&P (BBG)
• Last-Minute Health-Site Enrollment Proves a Hard Sell (WSJ)
• Bernanke’s Recession-Fighting Weapon Developed by 1900s Banker (BBG)
• Asia Stocks Are Little Changed Amid China Funding Concern (BBG)
• Regulators' Guidance on Volcker Rule Gives Banks Little Relief on Debt Sales (WSJ)
• On one hand: Man Who Said No to Soros Builds BlueCrest Into Empire (BBG); on the other: Michael Platt's BlueCrest Capital Poised for Rough Close to 2013 (WSJ)
• BOJ Keeps Record Easing as Fed Taper Helps Weaken Yen (BBG)
• Bank of England becomes more cautious on economic predictions (FT)
• Gold Climbs From Lowest Close Since 2010 as Goldman Sees Losses (BBG)

It’s like a futuristic film with hoards of evil masses of people, poverty-stricken, living off the land, while the rich and wealthy continue to lord it, served to their hearts content and just raking it in, while the others hardly get enough to eat and drink.

Of the 8 "most important ever" FOMC decisions in 2013, this one is undisputedly, and without doubt, the 8th. As Jim Reid summarizes, what everyone wonders is whether today’s decision by the FOMC will have a bearing on a few last-minute Xmas presents around global financial markets. No taper and markets probably breathe a sigh of relief and the feel-good factor might turn that handheld game machine into a full-blown PS4 by Xmas day. However a taper now might just take the edge off the festivities and leave a few presents on the shelves. Given that the S&P 500 has pretty much flat-lined since early-mid November in spite of better data one would have to say that some risk of tapering has been priced in but perhaps not all of it. Alternatively if they don’t taper one would expect markets to see a pretty decent relief rally over the rest of the year. So will it be Santa or Scrooge from the Fed tonight at 2pm EST?